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Smokers' lawyers gamble on pay

07/25/00

If the record $145 billion punitive damage award for sick Florida smokers in the Miami tobacco trial holds up, it could also result in a record payday -- perhaps in the billion-dollar range -- for Stanley and Susan Rosenblatt, the lawyers who took a case

But if the staggering verdict is overturned on appeal, the Rosenblatts would end up with nothing -- despite working thousands of hours on the case and spending at least $1 million of their own money to bring the case to trial.
The tobacco companies wasted no time after the July 14 verdict in saying they planned to vigorously appeal the judgment. The appeals process could take two to three years, according to legal experts, delaying the payment of any legal fees until it is concluded.
``It's so far down the road, that we're not even thinking about it,'' Stanley Rosenblatt said Monday. He was awaiting the tobacco companies' next move, while his wife, Susan, worked on a motion for a final judgment, which the couple expects to file soon.
Ultimately, Circuit Judge Robert Kaye, the trial judge, will decide the fees.
The formula often used in state courts is the number of billable hours times a lawyer's hourly rate times a multiplier that depends on the risk and how extraordinary the results in the case were, said Steven Hunter, a Miami attorney.
Hunter is serving as lead counsel among six law firms filing individual lawsuits on behalf of flight attendants in the 1997 second-hand smoke case, another tobacco class-action suit won by the Rosenblatts.
In the more recent case brought on behalf of Florida smokers whose health was damaged after using tobacco products, Hunter said both the risk and results were ``unbelievable.
``There's never been a case like it,'' he said.
``Every lawyer in 1994,'' when the case was filed, ``said we were just crazy. That this would be a bottomless pit,'' said Rosenblatt.
While the Rosenblatts waged war on Big Tobacco with little more than two associates and a small staff plus volunteers, the tobacco companies threw immense resources at the case.
``Whatever Stanley and Susan get, they deserve to be the trial lawyers of the century. You have to give them all kinds of credit,'' said Robert Montgomery, a Palm Beach attorney who was one of the lawyers that took on Big Tobacco for the state of Florida and waged a 17-month battle to collect billion-dollar legal fees after winning the $13 billion settlement.
Other possible outcomes of the Miami trial include a settlement, which the tobacco companies say they oppose, or a reduction in the punitive damage award by the trial judge.
If tobacco lawyers have their way, neither the Rosenblatts nor a potential class of perhaps as many as 700,000 Floridians sickened by tobacco products will see a penny.
``We will leave no stone unturned in the appellate process,'' William S. Ohlemeyer, vice president and associate general counsel for Philip Morris, the nation's largest tobacco company, said after the $145-billion verdict. ``This trial has demonstrated clearly that misuse of class-action procedure can lead to outrageous results.''
Generally lawyers' fees in class-action suits are about 25 to 30 percent of the award or settlement.
``But if the settlement or verdict goes north of $50 million then the percentage starts to decline, and anything more than $100 million, the percentage starts to decline rather precipitously,'' said Mike Pucillo, a West Palm Beach lawyer who has tried class-action securities cases.
``If they ever get paid, I would imagine it would be a single-digit (percentage) recovery, but there's not much of a track record'' in the billion-dollar verdict range, he said.
The rules of professional conduct for Florida lawyers state that the fees they charge or collect shouldn't be ``illegal, prohibited or clearly excessive.''
In determining ``reasonable'' fees, factors such as time, labor, novelty, complexity and the difficulty of questions involved may be taken into consideration, as well as lawyers' abilities, skill and experience and the significance of the case.
The Rosenblatts' fee in the second-hand smoke case, for example, was $46 million. That's just over 15 percent of the $300 million settlement they won to set up a second-hand smoke research foundation and the right to sue for individual flight attendants whose health was damaged when passengers lit up on flights.
The Rosenblatts also were reimbursed $3 million for expenses.
Although most flight attendants agreed with the fees, a handful of objectors held up the settlement, saying it was unfair because the $300 million settlement was destined for the research foundation, rather than individual plaintiffs.
Objecting lawyers also called the Rosenblatts' fees unreasonable, but in 1999 an appeals court noted that the couple had taken a case ``with seemingly insurmountable odds. The likelihood of success was not strong, and if defeated, class counsel would have received no fees and no compensation for approximately $3 million in out-of-pocket costs.''
When a team of high-powered private attorneys, including Montgomery, won the $13-billion settlement for the state of Florida in 1997 to recover hundreds of millions of dollars the state spent treating people with smoking-related illnesses, it took almost 1 1/2 years before they saw the first of their fees.
The so-called dream team signed on with the late Gov. Lawton Chiles in the difficult case for 25 percent of any winnings. ``It was the tightest contract I've ever had in 43 years of practicing law,'' said Montgomery.
So when the settlement was announced, he and the other lawyers were incensed that instead of 25 percent paid by the state, the arrangement called for the tobacco industry to pay ``reasonable'' fees, to be set in arbitration.
The lawyers filed liens against the money the state was due to collect.
The issue eventually went to arbitration, and the fees approved by a three-lawyer arbitration panel in December 1998 were actually $3.4 billion -- slightly more than 25 percent the private lawyers had sought. It is being paid over several years.
Lawyers who have won big class-action suits say when the prospect of big fees are on the horizon the number of attorneys who believe they're entitled to a share of the fees expands exponentially.
``Oh, Lord yes, they come out of the woodwork,'' said Montgomery.
Michigan lawyer Cliff Douglas, president of Tobacco Control Law & Policy Consulting and a long-time tobacco foe, for example, said he was outside plaintiff's counsel of record in the Florida smokers case and brought three whistleblowers -- former tobacco company scientists -- and important documentation to the case.
While complimenting the Rosenblatts for their work in the trial, he said, ``There was this army of people behind them.'' And, he said, ``as counsel of record I do have a claim (for fees). We (he and the Rosenblatts) have an understanding about future remuneration.''
But Rosenblatt said Douglas was never counsel of record. ``Absolutely not,'' he said. ``He was a liaison for certain witnesses. He assisted on a couple of narrow aspects of the trial. He did valuable work for a limited time. It is unfortunate that he has tried to expand his role.''